SCOTTGILLESPIEtClara managingpartner

Among the things trav- el buyers care about, savings is arguably the most essential, the most visible, the most
measured. Savings, defined
here as the gap between published and negotiated price,
is at the heart of most negotiations; it is procurement’s
guiding light. It’s been this
way for the past 20 years, and
we take its god-like status for
granted. But savings is a false
god, leading its worshippers
down the wrong path.

Three Evils of Savings

Capturing savings builds
false confidence. More savings
does not mean safer, healthier
or more productive travel. Just
the opposite. Research shows
that compared with traveler-focused programs, cost-focused
programs produce 22 percent
fewer effective trips, 12 percent
more wasted trips and less productive and more stressed travelers with higher attrition risks.
Any savings achieved pales
in comparison to these much
higher costs.

Savings is a lazy substitute
for value. Awarding contracts
based on savings lets travel
buyers duck the hard job of
measuring the quality and
value of their suppliers. Using
savings as a proxy for value
does a disservice to most every supplier.

Savings has no financial value. Budget owners and travelers spend money, so they
care about prices, not savings.
Their worlds would not change
one bit if savings were never
reported. Let that sink in.

A Radical Thought Experiment
Imagine that your management suddenly forbids you to
report savings—no year-to-date savings, no net effective
savings rates, no average discounts, nada. How would you
show the value of your travel
program? For those who think
that challenge is frightening,
have faith, for it can be done.

Think first about what reallymatters to the travel budgetowners. They want to keeptheir travelers safe, healthy,productive and engaged.They want to hire good can-didates quickly for their openroad warrior positions. Theywant good returns on theirtravel spend. Getting that re-turn means negotiating goodprices, of course, but pricenegotiations pale comparedwith getting good results fromthe trip. Trip outcomes matterfar more than trips.

Travel buyers have the
chance to reinvent their category goals, strategies and
careers by focusing on trip
effectiveness. Ditto for the
travel management companies. There is a much brighter
future ahead for anyone who
can increase the effectiveness
of a program’s trips.

Measure & Manage
What Matters

What should you measure,
other than savings, to show the
value of a well-managed travel
program? Consider these metrics, all of which should be
benchmarked: